THE COMPANIES BILL.

New Zealand Herald, Volume XL, Issue 12402, 26 October 1903, Page 5

THE COMPANIES BILL.

A CONSOLIDATING MEASURE,

IMPORTANT PROVISIONS.

[BY TELEGRAPH.— CORBESrOXpENT.]

Wellington, Saturday. One of the most important Bills introduced this session, the Companies Bill, v.-as reported to tho House yesterday afternoon from the Extension of Commerce Committee. The Bill bears the name of Sir J. G. Ward, who has devoted a great deal of attention to the subject. He has had also the assistance of the members of the committee, and of Messrs. H. D. Bell and Morrison, of Wellington, whose assistance has been very valuable, Mr. Bell being-regarded as one of the best authorities.on company law in the : 'colony. The general opinion is that the Bill will smooth the way for commercial enterprise in the colony to a considerable extent, and Sir Jos. Ward has hopes of its becoming law this session.

I have only time to give a brief outline of the main alterations made in the Bill by the committee. A new clause has been added as follows: —1. In any case where(a) A company by the working or exhausting of a mine, quarry, patent, timber right, leasehold, or other wasting asset in the ordinary course of its business, has reduced the net value of its capital assets to an amount less than the amount of the company's paid up capital or (n) the.net value of a company's capital assets is by loss of capital less than the amount of the company's paid up capital, whether such loss of capital be a realised and ascertained loss or an estimated loss, it shall not be obligatory on such company, before declaring a dividend from the profits on the company's operations for any period, to have the company's capital reduced in accordance with the provisions of this Act, or to reinstate any lost capital out of profits, provided that the auditor or auditors of the company certify on the company's balancesheet for the period in respect of which it is proposed to declare a dividend that the assets of the company, other than the profits proposed to be divided, are, upon a valuation thereof made to his or their satisfaction, more than sufficient to pay the debts and liabilities (excluding the paid-up capital) of the company. 2. Nothing herein shall be construed as authorising a return of capital to shareholders:, excepting such as may be involved in the legitimate working of a mine, quarry, patent, timber right, leasehold, or other wasting asset in the ordinary course of a company's business. The object of tho clause is to facilitate the operations, of companies, such as mining and timber companies, whose assets are being gradually worked out. " : A new clause dealing with shares, where no contr has been registered, reads as fol-lows:—-In any case where shares in any company were issued prior to the passing of the Companies, Act, 1901, as fully or partly paid up for a consideration other than cash,, but no contract was filed as required by section 34 of the Companies Act, 1882. If such shares—(a) Were issued bona fide for a substantial consideration or (b) were subsequently acquired by any person bona tide without notice of the omission as aforesaid, the allottee or holder of such shares shall not be liable to pay to the company in respect of such shares any sum other than the amount of the nominal liability (if any) subject to which the shares were issued. A new clause (No. 130) provides that mortgages are not operative unless registered. In the matter of private companies important provisions are added in the direction of increasing the number of persons who can ] form such companies up to 25. Hitherto, 1 the maximum has been seven. The new provisions will enable families of more than seven to be shareholders in a private company. It will also meet cases in which it is desired to take employees into partnership. A penalty is provided in the case of private companies carrying on business with more than 25 members;, or with less than two. If the membership is reduced to one only, such member shall be personally liable for the payment of the whole debts* of the company contracted during the time it so carries on business, and may be sued for the same in any court of competent jurisdiction. The committee and the law draughtsmen have evidently devoted a great deal of attention to the important question of articles of association. The first schedule of the Bill gives lengthy regulations for the management of a company limited by shares.: It i's also clearly set out how the capital and liabilities and the property and assets of a company should be set out. The Bill provides for i considerable concessions in the matter of I registration fees.